Task 2 Cash Budget Case Study

Water Play Pty Ltd sells inflatable water toys and other pool play items. You have been asked to prepare budgets for the quarter ended 31 March 2019 for the business based on the following information.

The Balance Sheet for Water Play Pty Ltd as at 31 December 2018 was as follows:

Current Assets
Bank	16980
Inventory	2000
Accounts Receivable*	1991
Prepaid insurance**	200	21171
Non-current Assets
Store furniture & fittings	4650
Accumulated depreciation	1480	3170
		24341
Current liabilities
Accounts payable	995.50
Superannuation payable	304
PAYG W/H Payable	800
GST clearing account	2690	4789.50
Non-current liabilities
Bank Loan	4200	4200
Total liabilities		8989.50
Net Assets		15351.50
Owners Equity		15351.50

*Credit sales for December were $7964 and 25% of these were still outstanding on 31^st December.

**Credit purchases for December were $9,955 and 10% of these were outstanding on 31^st December.

**Prepaid insurance expires on 28February 2019. The new insurance policy will be paid on 1 March 2019 for 12 months and will be $1320 including GST. Prepaid insurance at 31 March 2019 should be $1,100.

Revenue

Income for January to March 2018 (net of GST) was:

	January 2018	February 2018	March 2018	Total
Revenue	$18,500	$17,980	$23,720	$60,200

Note: Sales for December were $19910 including GST and 10% of this total was on still outstanding at 31^st December 2018.

Budgeted revenue is to be increased in accordance with organisational policies and procedures for budgeting.

Collection of revenue:

Sales are made up of 60% cash and 40% credit.

75% of the credit sales are collected in the month of sale and the balance are collected in the month following the sale.

Purchases

Credit purchases are estimated to be 50% of sales each month. 90% of purchases are paid for in the month of acquisition and the balance are paid for in the following month.

Monthly Cash expenses:

Rent $1100 Including GST

Leasing $440 Including GST

Stationery $220 Including GST

Electricity $330 Including GST

Loan repayments $120 per month (no GST)

Net Wages Paid $3000 per month. 25% PAYG Withholding tax has been withheld. This needs to be paid by 21^st of each month in accordance with ATO requirements. Net wages for December was $2400.

Superannuation is 9.5% of gross wages and is payable by 21^st of each month in accordance with ATO requirements.

Non Cash Expenses

Depreciation is $1380 per annum

Loan Interest $102 for the quarter ended 31.03.19

Inventory

Inventory is seasonal and expected value on hand at 31 March is $4350.00 excluding GST.

Tasks required:

On the Excel spreadsheet supplied in the file FNSACC513_AT2_TEM_TQM_v1.xls you are required to complete the quarterly budgets for the quarter ended 31 March 2019. Use formulas for spreadsheet calculations where possible. The following budgets are required to identify milestones and performance indicators for the March quarter:

1. Prepare a cash budget for the quarter ended 31 March 2019 showing each month and the totals for the quarter.
2. Prepare a Budgeted Income Statement for the quarter ended 31 March 2019
3. Prepare a Budgeted Balance Sheet as at 31 March 2019